EXECUTIVE EDUCATION

Executive Education in a Turbulent Economy

What follows are considerations about whether or not to invest in executive education that go beyond the question of cost. This material is based on a conversation with Professor Stephen Burnett, Associate Dean of Executive Education at Northwestern University’s Kellogg School of Management.

When the economy is challenged, it is perfectly reasonable - in fact proper - to evaluate how every penny is spent. Many organizations of all sizes worldwide include executive education as an important part of their management development programs. Those with long experience in executive education recognize the cyclical nature of the business but never question its value. Given the current state of the economy, a person making decisions about whether or not to invest in executive education might keep the following questions in mind:

Doesn’t it “look bad” to send people to training courses when a company is announcing layoffs?

Investing time and resources to improve management quality is not just for good economic conditions. Use of executive education should be seen as a strategy that makes an impact on organizational performance and the best business schools should be a natural place to turn for strategic insight in challenging times.

The common observation that it “looks bad” to send people to training and development programs when simultaneously reducing headcount is troubling. It implies that investing in new knowledge and skills for employees is equivalent to a Las Vegas junket - a costly frill that adds no value to the business and that can only be justified, if at all, during flush economic times. The Kellogg School’s executive programs are intense experiences, and I have never heard a participant remark that spending from 8:30 am to 9:00 pm in class and study group sessions, followed by two more hours of preparation for the next day, felt very much like a relaxing holiday. Indeed, our executive students will complain loudly if the schedule fails to maximize their learning from the faculty and their peers. They come to us with serious goals: to help them improve their skills and the performance of their organizations and to develop a renewed sense of energy and purpose in their careers.

How is the role of executive education different in difficult times?

People tend to be very anxious when there are downsizings and reductions in force. When you stop investing in people, it makes them even more anxious. If, as a manager, I say to a staff member that we are committed to him or her for the long term and we are offering that person a specialized management training program, it tells that person a lot about where they stand with the firm and it builds their confidence. In the current business environment, you can assume that the people you most want to stay with your firm for the long haul are going to be as anxious about the future as anyone. They are, after all, only human. So it is a good idea to demonstrate support.

If an organization has confidence that it will survive, it can be argued that a slow period is an ideal time to provide specialized training. This can be a very difficult argument to make, because when costs are being cut, staff training is seen as cuttable. But it is important to at least consider the option of using a slow period as an opportunity to train key people. I have noticed that consulting firms in particular do their best to avoid layoffs. It is their view that when good people are not being fully utilized that it is a good time to train them. Other types of businesses should do the same. A down economy is exactly the time to show your support for the people you want in bad times and good.

What is the downside of reducing management development as a cost cutting strategy?

A general manager who is confident that his or her business will weather the downturn has to ask: “What are my priorities?” If the priorities are to manage quarterly earnings, then you just cut what is cuttable. Executive education is on the list because it is a medium- to long-term investment in people that is accounted for as a current expense. But that decision comes at a price. Suppose that you are at a point in your career where you need more skills, information, and a better peer network in order to move to the next level. And let’s suppose that as your manager I delay that for two or three years. That has implications. I don’t have to spend the money. That’s true. It will not impact my sales today. However, if I don’t start investing in you now, in 2-3 years when things are better, you will not be ready to move to the next level. So decisions to cut executive education have real economic implications.

How would you recommend that companies make the most of their investment in education during these tough times?

An obvious consideration for those who invest in executive education is how to get the most out of that investment. If a person attends an executive education program and returns with a single idea that leads to tens of millions of dollars in profit, there would not be much doubt about the value of the investment. The problem is that companies often view an executive program as an event rather than a process. A manager who is sending a key staff member to an executive program should carefully prepare that person for the program by discussing specific company problems and issues that should be addressed. The manager should conduct a thorough de-brief after the program’s conclusion, including having the participant present key program takeaways to the relevant audience. With a difficult economy there is heightened scrutiny of every penny spent. It is more important than ever to make sure that the lessons learned in executive education programs are carefully studied and that key insights are put into practice. Why not give that multi-million dollar idea the best chance to surface?

For many business schools, executive education is seen as primarily a money making operation. How does executive education fit into the Kellogg School mission?

As a top management school, the Kellogg faculty members aspire to improve the practice of management around the world. While there are many ways we fulfill this mission, one way to make an immediate impact is to take an experienced senior-level executive and put her or him in an executive education classroom with world class faculty. You have both the formal instruction and the peer learning that goes with being in a classroom with other senior-level people. One of the reasons our faculty members are so strong is that they spend their lives working directly with experienced managers. It makes a huge difference. Professor Jeanne Brett, for example, who stands at the center of negotiation research, also spends a huge amount of time teaching negotiations to people who are doing it every day and who have substantial stakes in the outcome. That makes her a much better faculty member. Not only is she a rigorous scholar, but she has continuous exposure to practicing managers. Ultimately, executive education at the Kellogg School is not about money. It is about powerfully influencing the practice of management and developing the most rigorous and relevant faculty in the world.

© 2009 Kellogg School of Management, Northwestern University.
All Rights Reserved.
Policy Statements | Site Map
Kellogg School of Management
James L. Allen Center
2169 Campus Drive
Evanston, IL 60208-2800
Directions